Posted on 12/27/2010 8:08:50 AM PST by FromLori
Andy Xie's latest sees the liquidity war getting worse in 2011.
America will continue to pump the financial system with liquidity via tax cuts and quantitative easing. China will keep the yuan cheap and avoid clamping down on inflation.
The tense equilibrium can't last for long, as either sovereign debt or inflation gets too heavy to bear. Whoever lasts longer, wins.
Caixin:
The most likely candidates to trigger the next global crisis are the U.S.'s sovereign debt or China's inflation. When one goes down first, the other can prolong its economic cycle. China may have won the last race. To win the next one, China must tackle its inflation problem, which is ultimately a political and structural issue, in 2011. If China does, the U.S. will again be the cause for the next global crisis. China will suffer from declining exports but benefit from lower oil prices.
On the other hand, if China has a hard landing, the U.S.'s trade deficit can drop dramatically, maybe by 50 percent, due to lower import prices. It would boost the dollar's value and bring down the U.S.'s treasury yield. The U.S. can have lower financing costs and lower expenditures. The combination allows the U.S. to enjoy a period of good growth.
Xie notes that China may have the advantage here. While America has committed to a liquidity hose, Beijing still has the opportunity to crack down on inflation:
(Excerpt) Read more at businessinsider.com ...
Related link
One could describe the global economy as a race between the U.S. and China, to see who goes down first
http://english.caing.com/2010-12-23/100210360.html
The USA and China have become siamese twins - we will crash together.
Why not both?
Do you know why the Siamese twins moved to London the other one wanted to drive
China has an advantage as they are less marxist than the muslim. China has a lot more problems than people realize.
At least they do not have drooling idiots who watch TV, elected a muslim and who swapped their liberty for a TV clickers. This includes anyone watching TV because it all supports him including Prince Al Waleed’s Fox.
BTW - Murdoch’s second wife is a Chi Com plus he is in bed, along with ALL American TV networks, with the Saudis.
Hmm, we, the US, are looking for more ‘bailout’ money; China looking to ‘bailout’ the EU.....I know which one will collapse first. /s =.=
While I'm at it, food stamps. (EBT cards) can only purchase dried beans, hamburger, flour, cheese, milk, eggs, Thats all. Unemployment benefits only last 6 weeks, then you are eligible for an EBT card.
Either way capitalism will be blamed.
Forgot to add rice to that list.....
there are no more foodstamps. they use credit cards. they can buy any food in the grocery store but beer.
Probably both of us will crash...who will buy China’s stuff?
suntimes
Turn negativity of today into future with promise
Terry Savage
Last Modified: Dec 27, 2010 02:33AM
What will happen to the economy and the stock market and interest rates in 2011? This is the season for forecasts and prognostications. But that’s not what most people are thinking about when they wonder what’s in their economic future for the year ahead.
The one economic question on most people’s minds is whether the United States will grow again, and whether their lives will ever be materially better, and most of all — whether their children will have a better life than they do.
A Facebook poll taken a few months ago revealed that many had worked hard all their lives, lost significant ground in the recession — and were not at all optimistic that their children or grandchildren would have a higher standard of living.
Feelings of despair
Sure the stock market is starting the year at, or near, a new high since this terrible financial convulsion first started in 2008. And the official measure of economic growth — GDP — is showing that the economy is moving ahead, leaving the official definition of recession behind us. And yes, the unemployment numbers have made some progress, though hardly a dent in the massive numbers of people searching for work.
But that’s the stuff that economists consider. What matters to most people is the dramatic decline of hope that things will get much better. It’s a generational worry that has many Americans ready to believe that our best times are behind us. Most of us are willing to sacrifice for a good cause — and the best cause for many of us is our children’s future. Right now, it seems cloudy.
Those feelings of despair remind me of accounts of life in the Depression years. It must have been overwhelming to live in such continuing misery. The drought and dustbowl destroyed America’s farm economy, even as the Depression destroyed jobs. Few parents then could anticipate their children would live in a world of jet-age global travel and economic growth.
Today’s negative outlook also reminds me of the 1970s, when the effort to fight a war and create a “great society” at the same time, resulted in a frightening inflation, then a devastating recession. The stock market had hovered around 700 for a decade, the prime rate went to 201/2 percent, and unemployment hit double digits.
At the depths of the economic recession in 1980-82, few would have forecast that within 20 years the Dow would hit 12,000, and interest rates would be in the low single digits, and that an unexpected technology revolution would create unprecedented productivity and economic growth.
Yet, that’s exactly what the American economy delivered — an economic boom that created jobs and prosperity and hope for the future. And it created wealth.
Rooting for wealth in 2011
That’s what we should all be rooting for in 2011: wealth creation.
The politics of envy has never achieved economic growth, because it has at its core a desire to redistribute the existing wealth, instead of creating incentives to create growth that can lift an entire society.
We are told that there are too many “rich” people. Instead, we should think that there are not enough rich people. Because only wealthy people can pay the taxes that will fill in our budget deficits.
In 2008, the last year for which hard data is available, the top 1 percent of the nation’s adjusted gross income earners earned 20 percent of the total national income. Those are the truly wealthy. And, they paid 38 percent of the nation’s taxes.............
excerpt
http://www.suntimes.com/business/3031362-420/percent-economic-economy-future-growth.html?print=true
Whoever lasts longer, wins. The most likely winner: China.
Why? Gold and cash reserves, disciplined, cowed, docile, obedient workforce, and authoritarian executive government leadership that actually wants to actually win.
Well we are still bailing out foreign banks in addition to the fact that we paid huge amounts into the IMF and the Fed continues to monetize our debt and that doesn’t appear like it will be stop doing that anytime soon it may be a toss up...
The New Voting Members of the FOMC
http://www.economicpolicyjournal.com/2010/12/new-voting-members-of-fomc.html
Fed throws euro banks a lifeline
http://finance.fortune.cnn.com/2010/12/21/fed-throws-euro-banks-a-lifeline/
As long as Obama and his Communist minions are in office EVERYONE has the advantage. IMHO
“drooling idiots who watch TV, elected a muslim and who swapped their liberty for a TV clickers”
Bullseye!
It’s inconceivable!
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